On July 1,2017, Pharoah Company pays $24,000 to Crane Company for a 1-year insur

Question

On July 1,2017, Pharoah Company pays $24,000 to Crane Company for a 1-year insurance contract. Both companies have fiscal years ending December 31. For Pharoah Company. journalize the entry on July 1 and adjusting entry on December 31. (Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually, Date Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Attempts: 0 of 3 used Check Answer

Explanation / Answer

Solution :

Journal Entries - Pharoah Company Date Particulars Debit Credit 1-Jul-17 Prepaid Insurance Dr $24,000.00        To Cash $24,000.00 (To record payment of insurance) 31-Dec-17 Insurance expense Dr $12,000.00        To Prepaid insurance $12,000.00 (To record adjusting entry for insurance expired)

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